Reliance seeks Iraq play again

Billionaire Mukesh Ambani-controlled Reliance Industries (RIL), which had washed its hands of the autonomous, troubled and oil-rich Kurdistan region of Iraq last July, is looking to re-enter the arena.

RIL is among the seven companies shortlisted for the development of the over-4 billion-barrel Nasiriya oilfield and construction of an associated 3 lakh barrels per day (bpd) refinery in Iraq.

The six other companies are oil major Total of France, Lukoil and Zarubezhneft of Russia, oil giant CNPC of China, Brown Energy of the US and JGC & Tonen General of Japan.

According to Iraqi media reports, the seven shortlisted companies will be invited to review data packages and discuss contract terms before the project is awarded by the year-end.

Reliance Exploration and Production DMCC, the overseas conventional oil and gas subsidiary of RIL, had bought from the autonomous Kurdish regional government a 100% stake in Rovi and Sarta blocks in Kurdistan in 2007 for a signing amount of $15.5-17.5 million.

The contract had an option for a 15% interest to be exercised by the local Kurdish oil company. Unless exercised, RIL was allowed to hold complete interest in the two blocks.

In May 2010, however, RIL’s stake in the block reduced to 80% when the self-ruled Kurdish government assigned a 20% stake to Austrian oil firm OMV Petroleum Exploration Gmbh.

However, the entire deal was termed illegal by the Iraqi national government which does not recognise the regional Kurdish government that claims political autonomy. As a result, RIL was blacklisted from doing business in Iraq which is part ofOPEC (the Organisation of Petroleum Exporting Countries, comprising oil-rich countries in the Middle East).

However, in July 2012, RIL was able to sell the blocks to US oil major Chevron at an attractive
valuation. This helped it become eligible for bidding for Iraqi assets again.

But analysts are not impressed. They contend RIL’s main focus should still be the Krishna-Godavari (K-G) D6 block in India. The hoped-for foray into Iraq can at best be a good bet for RIL, given that things are gradually coming back to normal in the warn-torn nation, they said.